Taxation Determination
TD 95/51
Fringe benefits tax: where an employer purchases a car free of sales tax, or leases a car which has been purchased by the lessor free of sales tax, how is the sales tax amount determined for the purposes of the statutory formula method of calculating car fringe benefits?
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FOI status:
may be releasedFOI number: I 1014616| This Determination, to the extent that it is capable of being a 'public ruling' in terms of Part IVAAA of the Taxation Administration Act 1953 , is a public ruling for the purposes of that Part. Taxation Ruling TR 92/1 explains when a Determination is a public ruling and how it is binding on the Commissioner. Unless otherwise stated, this Determination applies to years commencing both before and after its date of issue. However, this Determination does not apply to taxpayers to the extent that it conflicts with the terms of a settlement of a dispute agreed to before the date of issue of the Determination (see paragraphs 21 and 22 of Taxation Ruling TR 92/20). |
1. Under the statutory formula method of calculating car fringe benefits in section 9 of the Fringe Benefits Tax Assessment Act 1986, the base value of the car is the amount which the employer or the lessor could reasonably have expected to pay if the car had not been purchased free of sales tax. The base value will be the amount actually paid plus the notional amount of sales tax which would otherwise have been payable.
2. This Office will accept various methods to arrive at a figure for the notional sales tax, including:
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- where the amount of sales tax which would otherwise have been payable is disclosed in the purchase documentation, that amount;
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- the amount calculated by multiplying the tax-inclusive Recommended Retail Price (RRP) of the car by the applicable percentages (rounded) set out in the table below;
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- where the RRP for the car is less than the sales tax luxury car limit (STLCL), the amount calculated by multiplying the actual cost of the car by the sales tax rate applicable to non-luxury cars as set out in the last column of the table below.
| CAR PURCHASE DATE | STLCL FOR PERIOD | IF RRP IS LESS THAN THE STLCL | IF RRP IS NOT LESS THAN THE STLCL | SALES TAX RATE FOR NON-LUXURY CARS |
|---|---|---|---|---|
| before 1/7/1993 | $45,693 | 10% of RRP | 19% of RRP | 15% |
| before 18/8/1993 | $46,790 | 10% of RRP | 19% of RRP | 15% |
| before 1/7/1994 | $47,116 | 11% of RRP | $5,200 plus 25% of excess above STLCL | 16% |
| before 10/5/1995 | $49,896 | 11% of RRP | $5,500 plus 25% of excess | 16% |
| before 1/7/1995 | $51,615 | 14% of RRP | $7,200 plus 25% of excess | 21% |
| before 1/7/1996 | $53,622 | 14% of RRP | $7,800 plus 25% of excess | 22% |
3. The sales tax luxury car limit referred to above is the Recommended Retail Price above which the vehicle is taxed at the luxury car rate specified in the sales tax legislation. It is not the same as the motor vehicle depreciation limit used for income tax purposes.
4. This Determination replaces and updates Taxation Determination TD 94/74.
Example
An employer purchases a car for business purposes on 1 September 1994 for $20,000, claiming a sales tax exemption on the purchase. The tax-inclusive Recommended Retail Price of the car is $26,400. The notional sales tax amount is 11% of $26,400, i.e., $2,904. The base value of the car (assuming there were no non-business accessories fitted) will be $22,904.
Commissioner of Taxation
20 September 1995
References
ATO references:
NO FBT Cell 30/82A; NAT 95/6879-4
Related Rulings/Determinations:
TD 94/74
Subject References:
car fringe benefits
fringe benefits
sales tax exemptions
statutory formula method of valuation
Legislative References:
FBTAA 9
| Date: | Version: | Change: | |
| You are here | 20 September 1995 | Original ruling | |
| 31 July 1996 | Withdrawn |